Does the running of a photovoltaic installation without a power storage facility on or adjacent to a private dwelling constitute an ‘economic activity’ within the VAT Directive?

Abstract

The Austrian Supreme Administrative Court (Verwaltungsgerichtshof, VwGH) presented a pending case to the ECJ by asking for a preliminary ruling. The question was whether the running of a photovoltaic plant on or adjacent to a private house constitutes a taxable activity under the VAT Directive, if the energy produced by this plant is fed into the public power grid for consideration. In return, the private household that owns this plant has its energy supplied by this public supplier. The consideration paid by the public supplier to the household for feeding into the grid is equal to the price the private household pays for the supply of energy. Although the private household’s photovoltaic system produces less energy than the household needs for its own purposes, this energy is fed into the public power grid. According to the VwGH this might be due to the fact that the photovoltaic plant in question is not equipped with a storage system. The private household considering carrying out an economic activity applied for the input VAT on the acquisition of the photovoltaic system to be refunded. The tax administration refused, and the Court of Appeal (Unabhänigiger Finanzsenat, UFS) granted the deduction, affirming the existence of an economic activity in accordance with Article 9 RVD. The tax administration lodged an appeal. Although the German Tax Supreme Court (BFH) consistently considers the feeding of privately produced energy into the public power grid as constituting an economic activity under the RVD, the Austrian Supreme Court remains doubtful.